Trump hits Canada, Mexico, EU with steel, aluminum tariffs

Trump Slaps Steel and Aluminum Tariffs on the E.U., Canada, and Mexico

The Trump administration delivered a gut punch to America's closest allies Thursday, imposing tariffs on steel and aluminium from Europe, Mexico and Canada in a move that drew immediate vows of retaliation.

At the same time, Ottawa will challenge the "illegal and counterproductive" USA measures under the North American Free Trade Agreement (NAFTA) and at the World Trade Organization, said Freeland.

After parsing the statements of Foreign Affairs Minister Chrystia Freeland and U.S. Commerce Secretary Wilbur Ross, Miller said it is clear the two countries want to do that.

He said he would speak to U.S. commerce secretary Wilbur Ross on Monday but added the United Kingdom "absolutely do not rule out counter-measures". "It is entirely inappropriate to view any trade with Canada as a national security threat to the United States", she said.

But in targeting its own allies, the USA tariffs will widen a rift with normally friendly trading partners, and the likely result of actions and counteractions is likely to be higher costs and reduced access to key goods and materials.

A 25 percent tariff on steel imports and 10 percent tariff on aluminium imports will be imposed on the EU, Canada and Mexico starting at midnight (0400 GMT on Friday), Ross told reporters.

Speaking on Friday morning, Germany's economy minister Peter Altmaier said he hoped that a decisive response from the European Union would prompt the U.S. president to think again. Similar tariffs had already been introduced on Chinese imports.

The countermeasures Canada announced have been designed with the same pain-inflicting objectives, even if Canada's relative economic size means Canadian surcharges won't inflict the same level of absolute discomfort on the USA economy.

A Trump administration investigation earlier this year concluded that the volume of steel and aluminium imports threatened USA national security by undermining domestic production.

Although many in the USA business community have reacted with alarm, Trump's actions have won him favour in the domestic steel and aluminium industry.

Throughout his presidential campaign, Trump accused China of dumping steel on the USA market - and said previous presidents had made a series of "bad deals" to promote free trade.

Ross said negotiations with Mexico, Canada and the European Union can continue even once the tariffs are in place. Representaives are leaving Friday for Beijing for talks aimed at preventing a trade war with China.

"The UK and other European Union countries are close allies of the U.S. and should be permanently and fully exempted from the American measures on steel and aluminium", Britain said in a statement. He justified the tariffs by arguing that United States producers are vital to national security and were threatened by a global supply glut.

While China is seen at more risk from a trade war because its exports are larger than its imports from the United States, operations of American companies in China make substantial sales there, which could be hit by any turn in sentiment.

But he said US Vice-President Mike Pence told him on Tuesday that as a precondition for that meeting, Trudeau would have to agree to a five-year sunset clause.

EU Trade Commissioner Cecilia Malmstrom called it a "bad day for world trade". Dissatisfied with the negotiations, Trump lifted the exemptions, in a move likely to provoke counteraction from trade allies. "Tariffs on steel and aluminum imports are a tax hike on Americans and will have damaging consequences for consumers, manufacturers and workers", said Sen. "The goals of restoring American industries to a sustainable operating domestic capacity and protecting national security must remain paramount". Others, including France, are determined not to yield to what they see as US bullying.

But the good news, if there is any, is that Trump may have shot himself in the foot - the trade war is only beginning.

Germany has tended to favor a more conciliatory approach, while others believe, after weeks of metal tariffs talks, that Trump will only respect a hard line.